Using a neural transplantation model and retrovirus-mediated gene transfer, we have introduced the oncogenes v-Ha-ras and v-myc into the developing rat brain. Upon insertion of a construct encoding v-Ha-ras and the Escherichia coli beta-galactosidase marker gene, the retroviral vector was found to be expressed in neurons, astrocytes, and endothelial cells of the graft. After latency periods of several months, fascicular neoplasms with expression of S-100 protein were observed in 50% of the transplants. The foreign genes were shown to be highly expressed in the tumors and in intact donor cells, by 5-bromo-4-chloro-3-indolyl-beta-D-galactopyranoside histochemistry, indicating that an activated Ha-ras oncogene has the potential to initiate neoplastic transformation of glial cells. Introduction of the v-myc oncogene into 15 grafts resulted in only a single primitive neuroectodermal tumor. However, simultaneous expression of the v-Ha-ras and v-myc genes yielded highly malignant, polyclonal neoplasms in all recipient animals, as early as 13 days after transplantation, from which cell lines could be easily derived. In addition, neoplastic transformation was also observed in vitro following introduction of ras and myc into embryonic forebrain cultures and into newborn cerebellar cultures. These data indicate a powerful complementary transforming effect of ras and myc on neural progenitors in vivo and in vitro. Coexpression of ras and myc may, therefore, provide a highly efficient tool for transforming neural precursor cells in distinct segments of the central nervous system at different stages of development.